Tag Archives: recession

A Slowing Global Economy and The Great Recession Continue to Impact Idaho’s Economy

Recessions are natural in any economy and are commonly defined as two or more successive quarters of negative economic growth. Since the end of WWII, the United States has experienced 10 recessions – each with its own unique impact.

And in December 2007, the U.S. entered a recession unlike any other.

The Great Recession

After six consecutive years of significant economic growth – largely spurred by a hyper-inflated housing market – the U.S. economy crashed into an 18-month recession. Worthy of its name, the Great Recession was the worst U.S. financial crisis since World War II. While the foibles of those who played the housing market are well documented, what was it that made the Great Recession so bad?

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Idahoans Showed Frugal Spending During the Recession

Idaho residents cut back personal consumption expenditures during the recession by a greater percentage than all but two other states.

Estimates from the U.S. Bureau of Economic Analysis show Idahoans reduced their per capita personal consumption spending 5.8 percent between 2007 and 2009. Nationally the reduction in per capita personal consumption spending was less than 1 percent. Only Nevada with a reduction of 7.9 percent and Arizona with a reduction of 6.4 percent posted greater cutbacks.

Nationally, per capita personal consumption spending on the essential items rose 3.6 percent between 2007 and 2009 – $523 to $14,874 – while spending on nonessentials fell 4.4 percent – $791 to $17,191. Twenty-four states and the District of Columbia saw per capita personal consumption continue to increase during that period.

In most states, per capita spending declined for nonessential items to offset continued increased spending for the essentials – food at home, gasoline and energy, health care, housing and utilities.

Idaho, however, is one of only six states where per capita personal consumption spending fell for both essentials and nonessentials. Idaho’s 3.3 percent drop in per capita personal consumption spending in essentials – $575 to $13,418 – was the largest decline except for Nevada’s 3.9 percent reduction. The state’s 8.1 percent cut in nonessential spending – $1,257 to $14,268 – was exceeded by four other states.

Idahoans cut per capita spending for housing and utility costs from $6,071 to $5,753, or 5.2 percent, to cover a $187 per capita increase in health care costs – 6.6 percent to $4,012 in 2009. The reduction in spending on housing and utilities was the third steepest in the country.

They also cut their food spending $119 to $2,484 per capita, or 4.6 percent, and decreased  gasoline and energy spending by over 15 percent to $1,169 per capita. Idaho was one of just three states where food spending was cut, and its 4.6 percent reduction was the deepest of the three.

Since 2009, Idaho’s per capita personal consumption spending has increased with essential items rising faster. Spending on essentials rose 11 percent by 2012 compared to a 10.1 percent increase nationally. Idaho’s per capita spending reflected a further, albeit slight, 0.3 percent decrease in housing and utilities, reflecting the persistence of low housing costs after the housing bubble burst in 2006.

But spending was up 4.8 percent on food as the U.S. Department of Agriculture’s estimate of Idaho households facing food insecurity in 2012 hit 14.3 percent. The 2.7 percentage point increase from 2009 was greater than all but six other states, according to the Agriculture Department report.

Health care spending in Idaho was up 17 percent – the fourth largest increase behind North Dakota, South Dakota and South Carolina. Nationally, health care spending rose 11 percent per capita.

Energy saw the largest Idaho increase among the essentials at nearly 59 percent from 2009. Only North Dakota, Oklahoma and the District of Columbia had greater increases. The national increase was 43 percent.

Idaho’s per capita spending on nonessentials rose 7.2 percent between 2009 and 2012, and at $15,301 was only $77 higher than in 2007.

Changes in personal consumption expenditures followed the state’s per capita personal income, which ranked 44th nationally in 2007, but after falling 4.3 percent by 2009 – the fifth steepest decline nationally – per capita income rose just 9 percent by 2012 to $34,481 to rank Idaho 50th among the states and the District of Columbia. Only seven other states posted smaller increases between 2009 and 2012.

Idaho per capita expenditures

Per Capita expenditure nation by state

Per Capita Non essential expenditure by state

Bob.Fick@labor.idaho.gov, regional economist
(208) 332-3570 ext. 3628

Idaho Job, Wage Recovery is Slow, Steady

Idaho’s job recovery began showing signs of life in late 2011 and picked up in 2013 when year-over-year monthly growth rates exceeded 2 percent, according to the Quarterly Census of Employment and Wages. In April 2013 Idaho had the third highest year-over-year job growth at 3.1 percent and the fourth highest in May at 3.1 percent.

Through the 12 months that ended in September 2013, Idaho recovered 21,000 of the 56,000 jobs it lost to the recession. While that recovery rate was 40th among the states, it underscored the slow job growth the state experienced during the first several years following the recession. Continue reading →

‘Tis the Season for Retail Hiring

retailvsannualaverage

The seasons are changing and so are retail employment trends. During the depths of the recent recession seasonal employment trends for many industries were subdued by soft hiring activity.

The distress in Idaho’s retail trade industry was especially prevalent between 2008 and 2010. Average employment for all Idaho’s industries in 2012 was still 7 percent below pre-recession levels. But retail trade employment was down 8.4 percent. Even though employment numbers are still down, signs of health are returning.
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Metro Boise Outpaces Rest of Idaho in Post-Recession Job Growth

Following the Great Recession there was an apparent divergence in employment recovery rates between urban centers and smaller cities, according to the authors of a recently published discussion paper.

nonfarm jobsLarger metropolitan statistical areas were experiencing more robust job growth than smaller ones. Analysis of Current Employment Statistics Total Nonfarm Employment data for Idaho, Oregon and Washington – each dominated by one large metro area – conform, demonstrating better employment growth in the dominate metro area compared to the other smaller cities and the states overall.

Nationally, most metropolitan areas experienced declines in jobs from peak to trough through 2007 to 2010. Ryan Howley, a U.S. Bureau of Labor Statistics economist now at the Bureau of Economic Analysis, and Toby Paterson, a Washington State Employment Security Department economist point out in their June 2013 paper “Employment Recovery in Urban Areas following the Great Recession”  that in the recovery period following the Great Recession trough, a pattern of steady but geographically uneven recovery emerged with larger urban centers experiencing higher job growth than medium and small areas.
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